Appreciate, a SEBI and IFSCA-registered fintech company, has launched a report titled ‘From Dalal Street to Wall Street,’ which shed light on the evolving dynamics of Indian financial markets and their growing integration with global investments.

As Indian financial markets mature, the report highlighted a significant trend: An increasing number of Indian investors are venturing beyond domestic borders, diversifying their portfolios with US equities.

This shift reflects a growing awareness of the benefits of global diversification.

Yogesh Kansal, Co-Founder and CMO of Appreciate, emphasised this trend in the report: “Diversification is no longer just a buzzword; it’s a necessity in today’s interconnected world. By allocating a portion of their portfolios to US equities, Indian investors can better navigate domestic economic downturns and leverage growth opportunities in one of the world’s most robust markets.”

Key highlights from the report

Investment landscape: The report stressed that investing in US markets from India is now more accessible than ever.

The Liberalised Remittance Scheme (LRS) allows Indian residents to remit up to $250,000 per financial year for various purposes, including foreign stock investments.

Diversification benefits: The report detailed how portfolios diversified globally, especially with US equities, have historically performed better during economic downturns in India.

For instance, during the 2016 demonetisation and the 2020 COVID-19 pandemic, diversified portfolios cushioned investors from severe losses.

Historical performance: The report presented a comparison of the S&P 500’s performance from 2009 to 2019, showing that while the index experienced an 8% drop, it also grew by 119 points, or 5.7%, showcasing the resilience of the US market.

Rupee depreciation: The report highlighed the significant depreciation of the Indian rupee against the US dollar from 2010 to 2020.

US market potential: The US stock market, with a market cap of $50.8 trillion, presents immense opportunities for Indian investors.

Some of the largest US companies have market caps that surpass the GDPs of major economies like France and the UK.

AI sector growth: Nvidia’s emergence as the leader in the AI space, achieving a market valuation of $3.34 trillion, exemplifies the potential for high growth in specific US sectors.

Outward remittances: India’s outward remittances hit a record $31.73 billion in FY24, growing at 16.91% year-on-year.

Taxation overview: The report provided a comprehensive overview of the taxation of foreign investments for Indian investors.

Income from foreign investments, including capital gains and dividends, is taxable in India, but investors can claim a tax credit for US taxes paid under the Double Taxation Avoidance Agreement (DTAA).

Challenges and opportunities: While global diversification offers numerous benefits, the report also outlined challenges such as currency volatility and tax implications.

However, the potential for high growth, currency appreciation, and stable markets make US investments an attractive proposition.